Sep 19 2024: Shares of Allegro (WA: ALEP) declined on Thursday after the company issued a forecast predicting slower earnings growth for the third quarter of 2024.
By 5:12 am (0912 GMT), the stock had dropped 7.8%, trading at PLN 35.70.
Allegro now expects Polish GMV (Gross Merchandise Value) growth to ease to 10-11%, falling below the consensus estimate of 12%. Revenue growth in Poland is also forecasted to range between 16-18%, missing the 19% anticipated by analysts.
Additionally, adjusted EBITDA growth in Poland is expected to slow to 11-13%, significantly underperforming the 15% market expectation.
At the consolidated level, Allegro predicts GMV growth of 9-10%, compared to the 12% projected by analysts. Revenue growth is expected to be 8-10%, below the 12% forecast, while adjusted EBITDA growth is anticipated at 5-8%, trailing behind the 12% market forecast.
“Profit-taking in shares could be on the horizon as earnings growth has reached its peak with no immediate upside to full-year 2024 expectations, and international losses have yet to bottom out,” J.P. Morgan analysts noted.
Despite the soft Q3 outlook, Allegro posted robust Q2 results, surpassing expectations in key areas. The company’s Polish GMV grew 12% year-over-year to PLN 15 billion, slightly beating both its own guidance and market estimates. Adjusted EBITDA in Poland increased by 35% to PLN 908 million, 4% ahead of consensus and above the company’s initial growth projection of 26-29%. On a consolidated level, group adjusted EBITDA rose 32% year-over-year to PLN 763 million, exceeding market expectations by 3%.
However, international operations posted an adjusted EBITDA loss of PLN 145 million, in line with the projected loss of PLN 138 million.
“While the Q2 results are solid, the weaker Q3 guidance is likely to dominate the narrative, potentially leading to consensus downgrades,” analysts at UBS said.
